Kealohas’ Bank Fraud Trial Delayed Until 2019

A federal magistrate on Tuesday granted Katherine Kealoha’s request to delay her Nov. 14 bank fraud trial because she is suffering from a medical condition that would prevent her from fully participating in her defense.

U.S. Magistrate Richard Puglisi granted the request to delay the start of the first of two trials involving the former assistant prosecutor and her husband, former Honolulu Police Chief Louis Kealoha, until at least February.

He said he did so after reviewing 43 pages of Katherine Kealoha’s medical records and determining there was evidence to justify delaying the trial for now. Puglisi sealed reports on her medical condition.

Puglisi is scheduled to hold another hearing Thursday to determine the new date for the bank fraud trial and another date for the second trial the couple faces on corruption charges.

Last spring, U.S. District Judge Michael Seabright ruled the government’s bank fraud and corruption case against the Kealohas would be divided into two trials with the bank fraud case going first on Nov. 14 and the corruption trial set to begin in March. Because the bank fraud trial will have to be moved, both trials will have to be rescheduled.

The couple are accused of lying on bank loan documents. They are also accused with four other Honolulu Police Department officers of framing Katherine Kealoha’s uncle for the theft of couple’s mailbox, then lying about it to investigators.

Her attorney, Cynthia Kagiwada, said she was pleased with Puglisi’s decision Tuesday. “We’re happy that the judge listened to all of our arguments and happy that he decided in the interest of fair trial, that their trial should be continued,” Kagiwada said

Kagiwada first asked the court to delay the Kealohas’ trial without giving a specific reason Oct. 10. Her request included four other sealed documents.

“While the continuance of the trial date is completely within the discretion of the court, Ms. Kealoha respectfully submits that good cause exists for the continuance,” Kagiwada wrote then.

A week ago, assistant federal prosecutor Eric Beste urged the court to deny the request for a trial continuance because it was “premature and lacking sufficient detail.”

Beste went on to write that Kealoha had a practice of “feigning serious illness” and that her request was “suspect.”

He also countered that the sealed documents provided by her attorney “fails to establish how the alleged medical condition would interfere” with her ability to participate in her trial.

And he noted that when Kealoha originally raised the issue of her medical condition at a hearing last month, she did not ask that the trial be moved.

Beste also pointed to her active participation in the recent sale of the couple’s Hawaii Kai home as evidence that she was not as ill as her sealed court filings indicated.

Kagiwada followed up with more detail, including 15 more exhibits, which were also sealed by the court, that explained in fuller detail why her client’s trial should be postponed.

Puglisi granted the trial delay based on the additional information provided by Kagiwada and lectured Beste about the “hyperbole” used in his filing.

The judge also criticized prosecutors for taking information that was sealed and referring to it in a public document. Until Beste’s filing there was no mention in the court record that Kealoha was asking for a delay because of a medical condition.

“It is my observation that you were not very careful when you filed that in the public domain,” Puglisi said. “Because a defendant in any case has a constitutional right to privacy.”

Kagiwada said she did not know whether her client would be healthy enough for a trial by February.

“At this time we don’t know,” she said. “We’ll just have to wait and see.”

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